A Conversation with Arash Asady of Bits of Stock
Recently we had the privilege of interviewing Arash Asady, the CEO and co-founder of Bits of Stock, an innovative stock rewards app. Here’s our conversation:
What’s your background and how did you get to where you are today?
I’m a first generation Iranian American. My father moved to the United States when he was 17 and became an electrical engineer for NASA. He moved my entire family over to the U.S., so I was born in Texas but then moved to California – very different parts of the world! I grew up in Southern California in San Diego, where the largest Marine Corps base is located. So when I was 18, I joined the United States military and enlisted in the United States Marine Corps. I was very interested in learning new languages and new cultures, so in my first two years in the military, I got to go and learn the many different languages of the middle east. I also studied politics and culture, basically being groomed to be an intelligence operator. In 2010 after my training, I deployed to Afghanistan where I was primarily tasked with illuminating networks of high value target individuals, like Taliban commanders and operators in the area. So I got to use a lot of data analysis skills, my language skills, and my understanding of the area of region skills to help tactical operators locate some really important people.
After my deployment, I wanted to stay in the military, but my father convinced me to pursue my education, so I did. I ended up taking my passion for data analysis and statistics and putting it into a master’s degree at Columbia University. I moved to New York City and enrolled in school, which is how I got my start on Wall Street as a rates derivatives trader, primarily in the fixed income and rates space. I did that for about six years, but it got a bit mundane just moving money around in capital markets. I knew that wasn’t something I wanted to spend the rest of my life doing.
I think I found my soul when I decided to become an entrepreneur. I met my co-founder Ryan Gary at university when I was doing my MBA and he was doing his master’s in computer science. Together, we had this really deep, shared interest in finance and tech market microstructure along with his background in machine learning and AI. At that time I was working on other startups, all of which failed at some point in their journey. When I met Ryan, we thought we were a perfect mesh of skills to do something real, and we decided to start working on this idea that would become Bits of Stock. Originally we joined university competitions and started doing things at NYU, which then ultimately became a commercially viable business.
What does Bits of Stock do, and how does Pentadata help you?
Four years ago when we started the company, we set out on a mission to help our peers, including ourselves, become invested in the stock market. We were really fascinated with this idea of leveraging the fractionalization of assets – of stocks and other types of asset classes – and using that technology to democratize access to investments for ordinary people. If someone doesn’t have thousands of dollars to buy one share of a single stock, how can they actually get started? We thought that was the biggest hurdle for younger people to start investing. We saw a lot of potential to overcome that hurdle through fractionalizing ownership. That was the technology we sought to use to solve a bigger problem, which was wealth inequality and how that inequality disproportionately impacts younger generations. When you look at the stock market, even still today, it’s actually gotten worse where 90% of all U.S. stocks are owned by 10% of account holders; and the same asset concentrations are found in cryptocurrencies, home ownership, etc.
So we’re now on a mission to reverse wealth inequality by making fractional ownership as easy as earning loyalty points. We looked at the loyalty and rewards market and saw a great opportunity to utilize the $400 billion annually spent on these programs, which is, for the most part, inefficient. That money doesn’t actually drive the loyalty it’s meant to do, or it creates liabilities for a lot of brands. We wanted to transform that money spent into something that’s actually beneficial for consumers and that actually drives behavior while building loyalty at the same time. That’s the premise behind Bits of Stock – it’s a win-win when young consumers can build wealth and a portion of that comes back to brands in the form of loyalty.
We partner with Pentadata as a technology provider in being able to match and recognize transactions of our consumers (with a high degree of predictability and accuracy) to the merchants that they’re shopping with. One of the challenges that we had early on was matching specific data from bank statement transactions to merchants. So that’s why we approached Pentadata initially, to provide that location data.
What are your top three suggestions you would give someone who’s starting their journey as an entrepreneur?
Number one, make sure you’re ready to do it. Have enough savings, give yourself at least 9-12 months of a humble period of discovery and learning, especially if you’re a first-time founder. It doesn’t matter what your background is. People will discount you if you don’t have startup experience. Number two, build relationships from day one, whether it’s with the people around you who could be potential employees, potential investors, potential partners, or customers. Building those relationships with everyone in your network is always going to help you in the future. And number three, practice fiscal discipline.
What are you excited about in the world of fintech?
I’m excited about next generation rewards. I believe the market is starting to realize the potential of replacing, or at least supplementing traditional rewards and loyalty (like cashback in points) with fractional ownership. That’s where we are; we’re positioned really well to be a market leader in that space. I’m most excited about that, but also I’m excited about embedded finance as an industry. Embedded finance is eating the world – it’ll be a $7 trillion industry by 2030. Every company will be a FinTech company in the next five to 10 years. So this really is a once-in-a-century business opportunity.
Where do you see your company headed in the next 5-10 years?
We’re looking to power rewards and loyalty programs based on fractional ownership for neobanks, credit unions, fintechs, and loyalty per software providers. On a global scale, we’re expanding our footprint. We’re currently live in the U.S. and in the Netherlands. Next year we want to launch in the UK and then expand our footprint in the EU. So we’re looking to build wealth for younger generations through powering rewards and loyalty programs on a global scale.
At Pentadata, we’re deeply inspired by Bits of Stock and the work Arash is doing in the financial sector to impact the future, and we’re excited to support them in that work. If you’re a startupper or developer and want to talk more about how partnering with Pentadata could make a difference for you, you can try out our API keys today.